China Merchants Port Holdings (CMPH) has entered into a 99 year concession agreement with the Sri Lanka Port Authority (SLPA) and the Government of Sri Lanka to operate and develop the country’s Hambantota port. The port has struggled to attract cargo flows in recent years, aside from car carrier business, and losses incurred have been a drain on SLPA resources.
CMPH has agreed to invest up to US$1.12 billion into the port and related activities. The Hong Kong based group will pay over US$ 973 million for an 85% share in Hambantota International Port Group (HIPG), and for ownership of Hambantota International Port Services (HIPS), with the balance of around US$146 million set aside for port and marine activities to be agreed with the Government of Sri Lanka over the coming year.
Hambantota is strategically located on the southern coast of Sri Lanka, around 10 miles from the main Asia-Europe shipping routes. It is viewed as having significant potential as a transshipment port, with its water depth of 17m along the quays and access channel making it well suited for large new generation container ships. As well as the container berths, the plan is to develop multi-purpose and liquid bulk handling areas.
CMPH already has a strong presence in Sri Lanka through its shareholding in Colombo International Container Terminal (CICT). The group says its investment in Hambantota will create a platform to develop synergies between the two Sri Lankan ports.